South-Western Federal Taxation 2019: Individual Income Taxes (Intuit ProConnect Tax Online 2017 & RIA Checkpoint 1 term (6 months) Printed Access Card)
42nd Edition
ISBN: 9781337702546
Author: James C. Young, William H. Hoffman, William A. Raabe, David M. Maloney, Annette Nellen
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 20, Problem 2RP
To determine
Write a letter to person J explaining the possibilities involved.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The sole shareholder of ABC Co. purchased the shares of the company in 2016 for $25,000 and has recently
valued the shares at $150,000. In preparation to sell the company to an arm's - length party, the
shareholder decided not to issue the usual annual dividend of $20,000. What type of tax planning is the
shareholder engaging in?
Fiona purchased 200 shares of Oxygon stock for $11 a share on August 11, 2020. On July 28, 2021, the price had fallen to $8. Concerned that the price might decline further, Fiona sold all her shares that day. She later regretted this move, and on August 7, 2021, she repurchased the stock when it was $10 a share. What is Fiona's 2021 capital gain or loss on these transactions?
No gain or loss will be reported.
$100 short-term loss.
$200 short-term loss.
$300 short-term loss.
Scott requested Jenny to work with the Bureau of Internal Revenue (BIR) in further reducing the tax liability of the company believing her to be an accountant. Meanwhile, Jenny took advantage of Scott’s mistaken belief and trust and convinced him that he would reduce the company’s tax liability by 50% in exchange for a substantive number of shares in the company. Is Scott’s donation of a substantive number of the company’s shares to Jenny valid? Why or why not?
Chapter 20 Solutions
South-Western Federal Taxation 2019: Individual Income Taxes (Intuit ProConnect Tax Online 2017 & RIA Checkpoint 1 term (6 months) Printed Access Card)
Ch. 20 - Prob. 1DQCh. 20 - LO.1 Sylvia and Trang want to enter into business...Ch. 20 - Prob. 3DQCh. 20 - Prob. 4DQCh. 20 - Prob. 5DQCh. 20 - Prob. 6DQCh. 20 - LO.3, 4, 5 Contrast the income taxation of...Ch. 20 - LO.3, 8, 9 The taxpayer has generated excess...Ch. 20 - Prob. 9DQCh. 20 - Prob. 10DQ
Ch. 20 - Prob. 11DQCh. 20 - Prob. 12DQCh. 20 - Prob. 13DQCh. 20 - Prob. 14DQCh. 20 - Prob. 15DQCh. 20 - Prob. 16DQCh. 20 - Prob. 17DQCh. 20 - Prob. 18DQCh. 20 - Prob. 19DQCh. 20 - Prob. 20DQCh. 20 - Prob. 21DQCh. 20 - Prob. 22DQCh. 20 - Prob. 23DQCh. 20 - Blaine, Cassie, and Kirstin are equal partners in...Ch. 20 - Prob. 25DQCh. 20 - LO.3 Green Corporation, a calendar year taxpayer,...Ch. 20 - Prob. 27CECh. 20 - Banana Corporation is a May 31 fiscal year...Ch. 20 - LO.4 Gold and Silver are two unrelated calendar...Ch. 20 - Maroon Corporation is a calendar year taxpayer....Ch. 20 - Prob. 32CECh. 20 - Prob. 33CECh. 20 - Prob. 34CECh. 20 - Drab Corporation, a calendar year S corporation,...Ch. 20 - Kim is a 40% shareholder in Taupe Corporation, a...Ch. 20 - Prob. 37CECh. 20 - LO.3, 4, 5 Using the legend provided below,...Ch. 20 - LO.3 Garnet has the following capital asset...Ch. 20 - LO.3, 8 Citron, a calendar year taxpayer, began...Ch. 20 - LO.3 Taupe, a calendar year taxpayer, has a...Ch. 20 - LO.3, 8 Robin had the following capital...Ch. 20 - Prob. 43PCh. 20 - Prob. 44PCh. 20 - Prob. 45PCh. 20 - Prob. 46PCh. 20 - Prob. 47PCh. 20 - Prob. 48PCh. 20 - Prob. 49PCh. 20 - Prob. 50PCh. 20 - Prob. 51PCh. 20 - Prob. 52PCh. 20 - Prob. 53PCh. 20 - Prob. 54PCh. 20 - During the current year, Thrasher (a calendar...Ch. 20 - Prob. 56PCh. 20 - Jim Olsen owns all of the stock in Drake, a...Ch. 20 - Prob. 58PCh. 20 - Prob. 59PCh. 20 - LO.9 The Pheasant Partnership reported the...Ch. 20 - Prob. 61PCh. 20 - Prob. 62PCh. 20 - Prob. 63PCh. 20 - Prob. 1RPCh. 20 - Prob. 2RPCh. 20 - Prob. 3RPCh. 20 - Prob. 5RPCh. 20 - On January 1, year 5, Olinto Corp., an accrual...Ch. 20 - Prob. 2CPACh. 20 - Prob. 3CPACh. 20 - Prob. 4CPACh. 20 - Prob. 5CPACh. 20 - Prob. 6CPACh. 20 - Prob. 7CPA
Knowledge Booster
Similar questions
- During 2019, John was the chief executive officer and a share- holder of Maze, Inc. He owned 60% of the outstanding stock of Maze. In 2016, John and Maze, as co-borrowers, obtained a 100,000 loan from United National Bank. This loan was secured by Johns personal residence. Although Maze was listed as a co-borrower, John repaid the loan in full in 2019. On Mazes Form 1120 tax returns, no loans from shareholders were reported. Discuss whether John is entitled to a bad debt deduction for the amount of the payment on the loan. Partial list of research aids: U S. v. Genere, 405 U.S. 93 (1972). Date H. Sundby, T.C.Memo. 2003-204. Arrigoni v. Comm., 73 T.C. 792 (1980). Estate of Herbert M. Rapoport, T.C.Memo. 1982-584. Clifford L. Brody and Barbara.I DeClerk, T.C. Summary Opinion, 2004-149.arrow_forwardared Jones has started a screen printing business. Because he is a private company he has chosen not to use accrual based on accounting. In January of 2017 he decides to go to the bank and ask for a loan to finance the purchase of a large piece of machinery. He is able to show the bank a net income of $75,000 for the year ending December 31, 2016. Based on his income, and debt to asset ratio the bank is unable to give him the loan. Jared goes back to the office and instructs his accountant to re-do the financial statements. This time using accrual basis accounting. The accountant adds an additional $20,000 of revenue and net income for a job that was performed at the end of December, and expected to be paid in January. He also includes $20,000 on the balance sheet for accounts receivable, and $2,500 in accrued expenses. With this new information Jared is able to get his loan. Was it ethical for Jared to include the $20,000 in his net income? Why or why not?arrow_forwardTrevorson Electronics is a small company privately owned by Jon Trevorson, an electrician whoinstalls wiring in new homes. Because the company’s financial statements are prepared only for taxpurposes, Jon uses the direct write-off method. During 2015, its first year of operations, TrevorsonElectronics sold $30,000 of services on account. The company collected $26,000 of these receivables during the year, and Jon believed that the remaining $4,000 was fully collectible. In 2016,Jon discovered that none of the $4,000 would be collected, so he wrote off the entire amount. Tomake matters worse, Jon sold only $5,000 of services during the year.Required:1. Prepare journal entries to record the transactions in 2015 and 2016.2. Using only the information provided (ignore other operating expenses), prepare comparativeincome statements for 2015 and 2016. Was 2015 really as profitable as indicated by its incomestatement? Was 2016 quite as bad as indicated by its income statement? What should Jon…arrow_forward
- During 2016, John was the chief executive officer and a shareholder of Maze, Inc. He owned 60% of the outstanding stock of Maze. In 2013, John and Maze, as co borrowers, obtained a $100,000 loan from United National Bank. This loan was secured by John's personal residence. Although Maze was listed as a co-borrower, John repaid the loan in full in 2016. On Maze's form 1120 tax returns, no loans from shareholders were reported. Discuss whether John is entitled to a bad debt deduction for the amount of the payment on the loan.arrow_forwardJared Jones has started a screen printing business. Because he is a private company he has chosen not to use accrual based on accounting. In January of 2017 he decides to go to the bank and ask for a loan to finance the purchase of a large piece of machinery. He is able to show the bank a net income of $75,000 for the year ending December 31, 2016. Based on his income, and debt to asset ratio the bank is unable to give him the loan. Jared goes back to the office and instructs his accountant to re-do the financial statements. This time using accrual basis accounting. The accountant adds an additional $20,000 of revenue and net income for a job that was performed at the end of December, and expected to be paid in January. He also includes $20,000 on the balance sheet for accounts receivable, and $2,500 in accrued expenses. With this new information Jared is able to get his loan. Was it ethical for Jared to include the $20,000 in his net income? Why or why not?arrow_forwardOn January 1, 2017, Leo paid $15,000 for 5 percent of the stock in BLS, an S corporation. In November, he loaned $8,000 to BLS in return for a promissory note. BLS generated a $600,000 operating loss in 2017. A. How much of his share of the loss can Leo deduct on his 2017 return? Assume the excess business loss limitation does not apply. B. Compute Leo’s basis in his BLS stock and his BLS note at the end of 2017.arrow_forward
- Kimball, a partner in a one-office firm, inherits 15 shares of Spotless Housekeeping Services stock. The stock has a market value of $25 per share; there is a ready market for them; and there are 300,000 shares outstanding. Spotless is an audit client of the firm, and Kimball does no work or consulting for Spotless engagements. Which of the following is CORRECT regarding Kimball receiving this stock and maintaining the firm's independence with Spotless? As long as Kimball does not work on the engagements for Spotless, nothing need be done. If he works on the engagements for Spotless, then the shares must be promptly sold to preserve the firm's independence. Since the shares are worth only $375 and they were inherited, nothing need be done. If Kimball transfers the shares to a blind trust where he is the beneficiary, independence with Spotless will not be impaired. The shares must be sold within 30 days of their receipt.arrow_forwardMany years ago, Jack purchased 400 shares of Canary stock. During the current year, the stock became worthless. It was determined that the company "went under" because several corporate officers embezzled a large amount of company funds. Identify the relevant tax issues for Jack.arrow_forwardKim purchased 500 shares in Prompt Messenger Services for $12,000 on November 21, 2021. The company went bankrupt on June 12, 2022, with no hope of recovery for the shareholders. On what date is the stock deemed to be worthless and what is the nature of the loss?arrow_forward
- In late 2008, Leticia invested $100,000 in TechCo, a startup high-tech venture. Although she had great expectations of financial gain, TechCo's efforts were not well received in the market, and the value of its stock plummeted. Four years ago when TechCo declared bankruptcy, Leticia wrote off her $100,000 stock investment as worthless securities. To Leticia's surprise, this year she receives $40,000 from the bankruptcy trustee as a final settlement for her TechCo stock. Leticia now realizes that she probably should not have claimed the loss four years ago because the stock was not completely worthless. However, since the statute of limitations has passed, she does not plan to amend her tax return from four years ago. She also decides that the $40,000 is not income but is merely a recovery of some of her original investment. How do you react to Leticia's plans?arrow_forward15. In 2016, Tom loaned his friend Janelle $5,000 to invest in various stocks. Janelle signed a note to repay the principal with interest. In 2017, the stock market plunged and Janelle incurred large losses. In late 2017, Janelle declared personal bankruptcy and Tom was unable to collect any of the loan. Tom had no other gains or losses in 2016 or 2017. His income from wages in both 2016 and 2017 was $50,000. The result is: a. Tom deducts a business bad debt of $5,000 in 2016. b. Tom deducts a $5,000 capital loss in 2016. c. Tom deducts a business bad debt of $3,000 in 2016 and carries $2,000 over to subsequent years. d. Tom deducts a $3,000 capital loss in 2016 and carries $2,000 over to subsequent years. e. Tom must amend her 2015 tax return to deduct the loss. 16. Agnes gives an asset valued at $12,000 with a basis of $10,000 to Mary; Agnes dies six-months later leaving an asset valued at $10,000 with a basis of $12,000 to Larry. What are Mary’s’ and Larry’s bases in these assets?…arrow_forward15. In 2016, Tom loaned his friend Janelle $5,000 to invest in various stocks. Janelle signed a note to repay the principal with interest. In 2017, the stock market plunged and Janelle incurred large losses. In late 2017, Janelle declared personal bankruptcy and Tom was unable to collect any of the loan. Tom had no other gains or losses in 2016 or 2017. His income from wages in both 2016 and 2017 was $50,000. The result is: a. Tom deducts a business bad debt of $5,000 in 2016. b. Tom deducts a $5,000 capital loss in 2016. c. Tom deducts a business bad debt of $3,000 in 2016 and carries $2,000 over to subsequent years. d. Tom deducts a $3,000 capital loss in 2016 and carries $2,000 over to subsequent years. e. Tom must amend her 2015 tax return to deduct the loss.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT